The contract was inflated by $23.4m (£18.2m) with the surplus going towards bribes for lawmakers, according to a police statement.

Mr Alves' successor as speaker of the Chamber of Deputies, Eduardo Cunha, has also been named as part of the investigation.

Cunha is already in prison serving a 15-year sentence for corruption, money laundering and tax evasion.

Mr Alves' arrest could further increase pressure on Mr Temer, who is facing calls for his resignation after an audio tape was leaked in which the president appears to discuss paying hush money to Cunha.